Cross-border commerce requires a long lead time for shipping, costs more due to shipping expenses and is more complicated when it comes to merchandise returns and credits for returned items. In-country/in- region commerce overcomes these issues, but can create a whole other series of challenges for the merchant.
Retailers can address these issues either alone or in partnership with a firm that can support the merchant’s globalization venture and help it overcome each related challenge by virtue of its local knowledge and infrastructure.
Long-distance Order Fulfillment
From the merchant’s perspective, internationalization via the cross-border approach is a preferred business model; however, it is less than ideal for consumers. In exchange for access to a whole new range of products, buyers must endure higher costs and greater inconvenience.
International shipments originating in the United States are expensive regardless of destination. Plus, when packages cross borders, customs and duties can add another level of complexity.
Then there is the issue of delivery time. Customers are used to receiving shipments in 2 to 3 days. Shipping internationally means a typical wait time of at least 5 business days. If the product is not acceptable when it arrives, the issue of return international shipping charges arises. Very few U.S. companies accept international returns free of charge.
Without a local fulfillment facility, distance, shipping time, costs and inconvenient product return mechanisms, including costly shipping and delayed credits, can pose major obstacles.
The Last Mile
The last mile – or delivery to the package addressee’s doorstep – is a major challenge for distance sellers relying on the big-name U.S. shipping providers or the local postal service. In fact, when it comes to B2C, the last mile could be a deal breaker.
Customer convenience is the primary issue. During the day, few people are at home, complicating deliveries that require a signature or payment. One option is to allow recipients to pick up deliveries at an alternative location.
Unfortunately, U.S. logistics providers do not have a network of locations across the globe that is comparable to the facilities they maintain in the United States. One U.S. shipper, for example, offers fewer than 40 parcel pickup locations in France. For some consumers, that translates to a 100-mile drive to get a package.
To be successful in the B2C arena, U.S. merchants must offer scheduled delivery services, multiple delivery attempts and/or an extensive network of delivery locations. No U.S. carrier can offer all those service worldwide. As a result, many merchants will lose sales due to issues experienced in “the last mile.” Given the potential for e-commerce around the world, retailers without a localized delivery strategy will leave a lot of revenue on the table.
Uwe Bald is vice president of international business development for Hermes, a provider of internationalization services to Europe, Russia, China and Brazil.